Q: I have not been happy with NPI's performance for some time and yesterday's drop of >6% has not helped. I am now slightly in the red and looking for guidance. What caused the drop...and what is your prognosis for NPIs performance going forward? Ironically, the stock seems to be one of the few utility companies still rated as 'strong buy' by Morningstar. Given no tax consequences (in fact a small capital loss), would you be inclined to move on? And, if yes, what utility and/or energy company would you recommend that pays a dividend >3% with some growth. (SU, BEP, and BIPC already held.) Thank you.
5i Research Answer:
The only direct news last week was that BMO cut its target price on the stock from $38 to $34. However, the whole sector was also week, with interest rate fears once again being cited as the reason. NPI is $3 off its low last month, but is down 44% in a year, and has underperformed. We would expect the share price to recover once rates peak (the Bank of Canada paused last week), and we do not think there are structural problems here. We would consider it a HOLD. That being said, FTS (4.2% vs 4.9% NPI) is currently cheaper, larger, has outperformed and will likely prove far less frustrating to own.